6. cuddlybear said...

They bought some properties in the 1990s but most of their properties were bought in 2005/6, famously at the rate of one a day

They only survived the crash because of the whole ZIRP thing and Fergus even admitted that himself

Based on the fact they only caught two years out of a circa fourteen year bull run last time, I reckon they will be making approximately the same mistake this time round and there is another decade of growth to come

The Wilsons are probably the biggest contraindicator around... with the possible exception of Moneyweek magazine!

7. reticent said...

@3 You don't expand as fast as they have without being leveraged up to the hilt. I can't imagine they have 50% equity. I wouldn't be surprise if they have as little as 25%. Not a completely unrealistic magnitude for the market to fall. That's probably why they couldn't sell them to a big investor. It's not a diversified portfolio (all in one area) and investors will have asked for a hefty discount to buy the whole lot. If they had tons of equity and they believed the market was about to crash, they'd have taken the hit, but instead they've been forced to dribble them out.

@4 In 2009-10, many people tried to tell me that rates could stay low for decades. I remember talking to a guy from the city about how they shot up in the 90s. He said that simply wouldn't happen again and I didn't really understand (or rather chose not to take on board) his explanation.

I now realise he was right. It was to do with the EMU and the fall of the Berlin wall, pretty unusual circumstances. So long as we have a flexible exchange rate mechanism, we can keep rates low. So long as we have a massive national debt, we will endeavour to do that. Real rates were negative for most of the post-war period for exactly that reason.

That said, as I said under the other article, the Wilsons clearly don't have a clue. He thinks house prices doubling every 7 years amounts to 13% annual growth. He doesn't even understand compounding.

@5 They definitely did not time the market, they just happened to enter BTL at the start of a massive bull market. In fact, they entered BTL just after BTL mortgages came in and I would argue that the expansion of BTL is what kept the bull market going for so long in the first place.

Tons of people have entered property over the years, as landlords and developers. The only reason we hear so much about the Wilsons and the Candys is that they happened to get into the game in the mid-90s, so their massive gambles paid off.

8. taffee said...

Most banks took huge bets on rates rising and took a huge bath when boe slashed rates....it's not known
The amounts lost but it's said to have been astronomical and helped bring their downfall....not much ever
Said about this.

As for Wilson's my point is how much do you need.....you sit on £100 million profit...well if I could get out with
£20 million I would particularly if I'd almost gone bust

9. reticent said...

Sounds like you're saying they thought the BOE would raise rates but instead they dropped them. I'm saying once they had fallen many people said they would stay low for ages.

Perhaps the banks bet that the BoE would raise rates because that seemed the logical remedy to a crisis caused by too low rates? But the remedy to a crisis is normally to lower rates. The govt. opted for the latter and also bailed the banks out. That and the fact the crisis was deeper than expected led to the national debt ballooning, leaving rates low for the foreseeable.

10. clockslinger said...

I love Moneyweak! But for seventy quid p.a. you can get better adviced in a much more succint format by subscribing to my own publication..."Moneyshot". We did a recent article on this topic (with our in house specialist, Mystic Meg) called "Are the Wilsons doing the right thing by SELLING all their property 'n' that just now?".
The findings were "Maybe. Possibly. Like, they may seem have got in at the right time and have possibly already made a lot of money, although, had they taken Moneyshots speculations seriously, they would have probably bought rare earth metals or gold just before the top of the market, and possibly spunked the rest on carbon credits." "Also you may think (not us, YOU) that depending on your age and your needs, property, equities, bonds, cash, precious metals and anything else that we haven't listed there but that might go up in price in future could all (possibly) have a role to play, in varying amounts, in a balanced investment strategy. "
However, please note that Moneyshot says "sh1t happens so nothing is guaranteed; that'll be fifty quid for your subscription" and we reserve the right to change our opinion without notice on advice from our senoir analyst, Professor Hindsight."

11. Quiet Guy said...

@Taffee

"What astonished me is they were effectively bailed out by near zero interest rates when They had 700 properties....then went on to accumulate 300 more! In hindsight they were right but no one knew rates would stay emergency for 6 years and Help to buy would be introduced."

Yep, they got away with a lot. If you asked them now, their answer would be something along the lines of "If you're so smart, why aren't you rich?"

@Reticent

"You don't expand as fast as they have without being leveraged up to the hilt. I can't imagine they have 50% equity. I wouldn't be surprise if they have as little as 25%. Not a completely unrealistic magnitude for the market to fall"

No idea what their equity is but a 25% fall in prices in the current climate after a crushing Conservative General Election victory? Pretty unlikely. Even if it's only a few million, they are pretty comfortable.

12. quiet guy said...

@Taffee

"What astonished me is they were effectively bailed out by near zero interest rates when They had 700 properties....then went on to accumulate 300 more! In hindsight they were right but no one knew rates would stay emergency for 6 years and Help to buy would be introduced."

Yep, they got away with a lot. If you asked them now, their answer would be something along the lines of "If you're so smart, why aren't you rich?"

@Reticent

"You don't expand as fast as they have without being leveraged up to the hilt. I can't imagine they have 50% equity. I wouldn't be surprise if they have as little as 25%. Not a completely unrealistic magnitude for the market to fall"

No idea what their equity is but a 25% fall in prices in the current climate after a crushing Conservative General Election victory? Pretty unlikely. Even if it's only a few million, they are pretty comfortable.

13. doomwatch said...

14. reticent said...

@11/12 I agree that it's unlikely right now but...

i) If we leave the EU (which I think is far more likely than most people appreciate - people tend to vote for the status quo but all the strong feeling is on the side that wants to leave and all the influential newspapers are for it) there will be massive implications for pound, foreign investment, finance and property. It's hard to conclude anything bullish. The uncertainty implications will sink in by the turn of the year once the Tory honeymoon period is over.

ii) There are a lot of people worried about the luxury developments in London. A lot of properties are being built all over London, but they are all priced and marketed at wealthy foreign investors who might suddenly prove flighty even if we stay in the EU, simply because of the trade deficit.

iii) The standard ZIRP/QE/FLS/HTB only postponing the inevitable, storing up problems for the future argument still carries weight. Occasionally, every central banker, hedge fund manager, think tank and newspaper (incl. The Economist a couple of weeks ago) worth their salt flags it up as either sowing the seeds of the next crash or leaving us ill-equipped to deal with it.